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Wednesday, 11 April, 2001, 13:01 GMT 14:01 UK

EU and US end banana war

The EU-US trade war hit developing world banana growers

The long-running dispute between the EU and the US over importing bananas has been settled.

After many years and many difficulties, we struck a balance between all parties

Pascal Lamy

EU trade commissioner Pascal Lamy announced an agreement to end the three year argument.

And the US has agreed to suspend the sanctions imposed on European luxury goods because of the row.

The banana war was the most serious falling out over trade between the EU and the US in recent years, although other industries including beef, cashmere and steel have also been at the centre of disputes.

Suspending sanctions

"After many years and many difficulties, we struck a balance between all parties," said Mr Lamy.

The EU says that it has managed to ensure both the protection of EU producers and banana growers in the Africa, Caribbean and Pacific nations.

The UK wants to protect Caribbean growers.

The EU's banana tenders will no longer be received on a first-come, first-served basis, a system that favours local producers because they can respond fastest.

The agreement still waits clearance from the European Parliament and each member state.

If all goes ahead, the US will suspend its sanctions from 1 July, and withdraw them completely after that.

The US accused the EU of favouring banana producers in former colonies over US owned plantations in Latin America, winning a landmark case with the World Trade Organisation in 1999.

Retaliation

This meant that the US was allowed to impose heavy tariffs on luxury goods imported from Europe, at an annual cost of $191.4m (215.2m euros) as retaliation.

The US then threatened to instigate a "carousel" system of rotating trade sanctions against a wide selection of EU imports, ranging from French handbags to Scottish cashmere and Danish bacon.

Beef also became a centre of controversy, with the US threatening to go to the WTO over the EU's refusal to import genetically modified meat.